IIA-CIA-PART4 Online Practice Questions and Answers

Correct Answer: C

Each SBU should have objectives, a strategy should be formulated to achieve those objectives, and a budget should be allocated. A harvest strategy maximizes short- term net cash inflow. Harvesting means zero-budgeting RandD, reducing marketing costs, not replacing facilities, etc. This strategy is used for weak cash cows and possibly question marks and dogs.

Correct Answer: C

The maturity stage is the ideal time for advertising lower prices and superior quality because this is the period during a product's life when competition is greatest. Due to the availability of many substitutes, a firm has reasons to set itself apart. Because price and quality are both concerns of customers during the maturity stage, it is an ideal time for the firm to differentiate its product by advertising low prices and higher quality.

Correct Answer: B

A relationship-oriented manager is employee centered. His or her self-esteem is strongly affected by personal interactions with subordinates. Fiedler indicated that such a manager is most effective when not faced with the extremes of high or low control situations. High control follows from strong position power, a structured task, and good leader- member relations. A low-control situation has just the opposite characteristics. Ina high-control environment, a concern for personal relations may be unimportant. In a low-control situation, therelationship orientedleader may be unable to provide the needed task structuring. Thus, themoderate controlsituation is best. An example is an assembly-line situation (a structured task) in which leader-member relations are poor.

Correct Answer: D

According to Fred E. Fiedler's contingency theory, people become leaders not only because of personality attributes, but also because of various situational factors and the interaction between the leaders and the situation. Thus, the right person at the right time may rise to a position of leadership if his or her personality and the needs of the situation complement each other.

Correct Answer: B

Threat of new entrants and bargaining power of suppliers are among the five basic forces that drive industry competition and the ultimate profit potential in the industry. This potential is measured in terms of long-term return on invested capital. The other three forces are rivalry among existing firms, threat of substitutes, and threat of buyers' bargaining power.

Correct Answer: A

Cost leadership is the generic strategy favored by firms that seek competitive advantage through lower costs and that have a broad competitive scope. Such a firm can earn higher profits than its competitors at the industry average price or charge a lower price to increase market share. The typical firm that follows a cost leadership strategy has low profit margins, a high volume of sales, and a substantial market share. Such a firm has efficient supply and distribution channels; is capable of large capital investment; if it is a manufacturer, has strengths in product design and process engineering; and closely supervises its labor force.

Correct Answer: A

Frederick Herzberg's two-factor theory of human behavior postulates that there are two classes of factors in the job situation. Maintenance or hygiene factors are those whose presence will not especially motivate people but whose absence will diminish performance. These factors are extrinsic to the work itself. They include supervision, working conditions, interpersonal relations, salary, and status. Motivational factors are those the absence of which will not diminish performance but the addition or availability of which will motivate employees. Intrinsic to the work itself, these include achievement, recognition, challenging work, advancement, growth in the job, and responsibility.

Correct Answer: B

The literature tends to support the theory that, while job satisfaction has an economic importance only indirectly related to productivity, satisfied workers exhibit lower rates of absenteeism, turnover, tardiness, apathy, and sabotage. Organizations with more organic or flexible organization structures may use more of the worker's skills and present a greater variety of work challenges, thus improving morale. Mass production technology usually involves repetitious, boring tasks.

Correct Answer: A

Job enlargement is a quantitative horizontal) extension of the job. It does not necessarily involve any greater worker control, responsibility, or challenge. An example is job rotation through assignment to duties requiring similar skills.

Correct Answer: C

In the 1960s, Douglas McGregor developed two theories to describe the extremes of managers' views of human nature. Theory X is a negative view of people and the way they interact with the organization. Theory X assumes that people dislike work, must be threatened with punishment to work toward organizational objectives, require close supervision, avoid responsibility, and crave security.

Correct Answer: C

Interpretation is a subprocess of perception. Noise is a disruption that impedes the communication process.

Correct Answer: A

Formal communication is conducted through the officially established structure of the organization. Informal communication operates outside officially established structural channels. The grapevine is an example. Although the grapevine is usually accurate, it can also carry gossip and rumor.

Correct Answer: B

If badly designed job descriptions occur, then the best resolution is reorganization.

Correct Answer: B

An arbitrator has the authority to impose an agreement. Arbitration may be requested by the parties or may be imposed by law or by the terms of a contract.

Correct Answer: B

Upstream (backward) or downstream (forward) integration is the acquisition of a capability that otherwise would be performed by external parties that are suppliers or customers, respectively, of the firm. Whether integration should occur depends on the firm's volume of transactions with the external parties (throughput) and the magnitude of the capability required to achieve necessary economies of scale. If the integrating firm's need is for a capability less than the efficient scale, one of its options is to acquire a capability with a costinefficient scale. The other option is to acquire an efficient capability that provides excess output (in the upstream case) or creates excess demand (from, for example, a distribution capability in the downstream case). This option will require the integrated firm to sell or buy in the open market. Thus, the second option carries the risk of having to deal with competitors.